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MARKET WRAP: FTSE ekes out gain, Bitcoin choppy at ETF begins trading

Economy12 hours ago (Oct 19, 2021 16:22)

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Key Points

FTSE 100 closing price of 7,217.91, +0.2%
Bellway shares higher following results
IAG falls after broker downgrade
Bitcoin choppy as ETF begins trading
GBP higher as banks bring forward BoE hike bets
Crude higher ahead of API inventories

By Samuel Indyk – The FTSE 100 finished with gains on Tuesday as markets await key inflation data from the UK tomorrow.

Shares in homebuilder Bellway (LON:BWY) were trading higher after the company hiked its dividend and reported a 65% increase in operating profit for the year ended 31st July 2021.

“There is little sign at the moment that the removal of the stamp duty holiday, the more uncertain economic backdrop and cost of living crisis in the UK are having a tangible impact on the prospects for Bellway and other housebuilders,” said AJ Bell Financial Analyst Danni Hewson.

IAG (LON:ICAG) shares were trading lower and propping up the blue-chip index after the company’s shares were downgraded by Berenberg. The broker took the rating to Neutral from Buy and cut its price target to 200 pence per share from 230 pence.

All eyes were on Bitcoin as trading in the first Bitcoin Futures ETF got underway. ProShares rang the opening bell on the New York Stock Exchange as its ProShares Bitcoin Strategy ETF (NYSE:BITO) begun trading.

The question now is whether this will be a catalyst for the next move higher or for some profit taking, according to OANDA Senior Market Analyst Craig Erlam.

“Either could be the trigger for some pretty wild price action in the cryptocurrency space, something everyone will be braced for in the coming hours,” Erlam said. “The launch coinciding with near-record highs is no coincidence but this is a market that has made extraordinary gains on the back of hype and this could be just that kind of event.”

Back to more traditional asset classes and GBP was strong as markets continue to expect the Bank of England to hike interest rates at least once before the end of the year. All eyes are now turning to tomorrow’s UK inflation figures following BoE Governor Andrew Bailey’s comments over the weekend.

CPI is expected to have remained steady at 3.2% YoY in September, however, analysts at Lloyds (LON:LLOY) expect a slight moderation.

“We expect UK September inflation to edge down to 3.0% YoY from 3.2% YoY, partly as a result of the base effects from the end of the Eat Out to Help Out Scheme on prices a year ago,” Lloyds analysts said in an emailed research note. The data will be released at 07:00BST on Wednesday.

WTI and Brent crude futures were again trading higher near multi-year highs ahead of the API inventory data after market. Coal futures are continuing to surge in China, while rising gas prices in Europe are also expected to increase demand for crude oil as power generators switch fuel.


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MARKET WRAP: FTSE ekes out gain, Bitcoin choppy at ETF begins trading

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